Fossil fuel support is rising again in a threat to climate change efforts

fossil fuel.jpeg

(Peter Forster, Unsplash)

This article is brought to you in association with OECD.


Fossil-fuel subsidies are environmentally harmful, costly, and distortive. After a 3 years downward trend between 2013 and 2016, government support for fossil fuel production and use has risen again, in a threat to efforts to curb greenhouse gas emissions and air pollution, and the transition to cleaner and cheaper energy. Support across 76 countries increased by 5% to USD 340 billion in 2017, according to a new OECD-IEA report prepared for the G20.

OECD-IEA Update on Recent Progress in Reform of Inefficient Fossil Fuel Subsidies that Encourage Wasteful Consumption also shows that even in the group of 44 OECD and G20 countries, where fossil fuel support is still declining, the reduction has slowed down. Support in these countries was down 9% in 2017, a slower decline than the 12% recorded in 2016 and 19% in 2015.

The reversal comes as some countries reinstated stronger price controls on fossil fuels, in response to volatility in international oil prices, which made it harder to continue energy pricing and taxation reforms.

Some progress has nonetheless been made: the report finds that many countries, including Argentina, India, Indonesia and several Middle Eastern and Northern African economies, have continued to take steps to reduce support for energy consumption. Western Europe has completed its phasing out of hard-coal subsidies and efforts continue to end state aid to coal-fired power generation in the European Union.

Oil and gas industries in several countries, however, continue to benefit from government incentives, mostly through tax provisions that provide preferential treatment for cost recovery. Such policies go against domestic efforts to reduce emissions.

The report was presented to G20 energy officials ahead of the G20 Ministerial Meeting on Energy Transitions and Global Environment in Karuizawa, Japan, where countries reiterated their commitment to phasing out inefficient fossil fuel subsidies and encouraged countries that have not done so to volunteer for a Peer Review.

“This new OECD-IEA report signals a worrying slowdown in our efforts to phase out fossil fuel subsidies,” said OECD Secretary-General Angel Gurría. “The critical nature of the climate change crisis has never been clearer than it is today. Countries should be accelerating their reforms, not taking their feet off the pedal. We cannot promote inclusive and sustainable growth if we continue subsidising fossil fuels!”

The report combines the IEA’s price-gap approach to capture the transfer to consumers of policies that keep fossil fuels below reference prices and the OECD’s 2019 Inventory of Support Measures for Fossil Fuels, which takes stock of spending programmes and tax breaks used in the 36 OECD countries and eight emerging countries (Argentina, Brazil, China, Colombia, India, Indonesia, Russia and South Africa) to encourage fossil fuel production or use. These include measures that reduce prices for consumers or that lower exploration and exploitation costs for oil and gas companies.

Increasing transparency on the use of scarce public resources can help to keep up momentum for fossil fuel subsidy reform. Building on the evidence brought to the table by the OECD, G20 countries committed in Pittsburgh in 2009 to “rationalise and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.” Since then G20 countries – China, Germany, Indonesia, Italy, Mexico and the United States – have completed voluntary G20 Peer Reviews of inefficient fossil fuel subsidies, and Argentina and Canada are just starting theirs. The OECD has been asked to play Secretariat role for all the country reviews, to chair and facilitate these processes, which have to date evaluated more than 100 government interventions relating to the production and use of fossil fuels.
“OECD evidence leaves no doubt” says Gabriela Ramos, OECD Chief of Staff and G20 Sherpa – “inefficient fossil fuel subsidies undermine global efforts to tackle climate change, aggravate local pollution, and are a strain on public budgets, draining scarce fiscal resources that could be invested in education, skills, and physical infrastructure. We urge all G20 countries to keep up the effort, and join the voluntary G20 Peer Reviews of inefficient fossil fuel subsidies.”

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Fighting for minds of youth in Latvia

Posting of workers: final vote on equal pay and working conditions

Germany readies to pay for the Brexit gap in EU finance

#Travelgoals: why Instagram is key to understanding millennial tourism

A Sting Exclusive: “Sustainable development goals: what role for business?” Commissioner Mimica asks live from European Business Summit 2015

How and why Mercedes fakes the EU fuel consumption tests

Germany’s strong anti-bribery enforcement against individuals needs to be matched by comparably strong enforcement against companies

Mosquitoes kill more people every day than sharks do in a century

Most ‘precious’ and ‘scarce’ resource of our time is dialogue, UN chief tells Doha policy forum

Brexit: PM May must hush Boris Johnson to unlock the negotiations

Microplastics, microbeads and single-use plastics poisoning sea life and affecting humans, says UN Environment

Is this 3D-printed building the future home for astronauts on Mars?

Artificial Intelligence and Machine Learning: “Am I a real Boy?”

Climate change and health: creating global awareness and using earth resources wisely

ECB offers plenty and cheap liquidity to support growth in all Eurozone countries

We are ‘burning up our future’, UN’s Bachelet tells Human Rights Council

Central Africa Republic: Violence drives thousands of refugees into neighbouring DR Congo, says UN agency

Europe faces economic turmoil as Italy gets closer to the Excessive Debt Procedure

EU budget 2020: Commission focuses its proposal on jobs, growth and security

What have the banks done to the markets making them unable to bear cheap oil?

UN health agency identifies 5-year-old Congolese boy as first confirmed case of Ebola in Uganda

‘We are nowhere closer’ to Israeli-Palestinian peace deal, than a year ago, Security Council hears

Students in Milan are moving in with the elderly to fight loneliness and save money

UN chief urges restraint following reported Saudi-led assault in Yemen

At last a good price for the Greek debt!

Pakistan has just planted over a billion trees

The new European Union of banks is ready

Reading this alone? Recent surveys reveal the curious truth about loneliness

AI can be a game-changer for the world’s forests. Here’s how

There are now four competing visions of the internet. How should they be governed?

UN chief welcomes possibility of resumed talks between US and North Korea

UN launches new framework to strengthen fight against terrorism

Egyptian death sentences a ‘gross miscarriage of justice’: UN human rights chief

The G7 fails to agree on growth but protects the big banks

Eurozone: Black economy loves the South

The Impact of climates changes in health: a problem for all of us

Travel the world, find yourself

Statelessness for terrorists’ families, never an acceptable option, urges UN rights chief

“The Sea is vast as it admits all rivers”, Ambassador Yang Yanyi of the Chinese Mission to EU gives her farewell address in Brussels

There is huge talent in the world’s refugee camps. We must realize this overlooked potential

Mario Draghi quizzed for last time by Economic and Monetary Affairs Committee

Refugee crisis update: EU still lacks solidarity as Hungary and Slovakia refuse to accept EU Court’s decision

Myanmar: Conflict resolution at ‘total standstill’, military commanders must answer for crimes against humanity

5G mobile is nearly here – but we should share networks to make it affordable

How to create a world where healthcare is a right, not a luxury

These are the best cities for tech

Monday’s Daily Brief: global homicide figures, neo-Nazi recruitment, Kashmir, and migrants’ plight in USA

Vegetarianism is good for the economy too

UN lauds special chemistry of the periodic table, kicking off 150th anniversary celebrations

A few, or rather two, trade and economic alliances may rule our brave new world

‘Critical test’ for North Korea’s Government as civilian suffering remains rife, warns UN rights expert

From low-earth orbit, ‘envoys’ of humanity join UN space forum

12 ways the tech sector can help save the climate in 12 years

‘Wind blowing in the direction of peace’ in Africa: UN Secretary-General

These countries are home to the highest proportion of refugees in the world

The Dead Sea is drying up, and these two countries have a plan to save it

Do we really understand the value of independent journalism?

Bank resolutions and recapitalisations by the ESM may end up politically swayed

‘Continue working together’ UN chief urges DR Congo, as country heads to polls

A Trumpist squad shook Davos and the world

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s